IEA cuts US oil forecast; GoM leases on sale; major Norway, UK fields approved
Upstream oil news you need to know.
US to bear brunt of 0.5 mb/d supply cut in 2016: IEA
This summers' oil price slump has prompted IEA to cut forecasts for non-OPEC supply in 2016 by nearly 0.5 million barrels per day, most of which will be felt in US.
"Lower output in the US, Russia and North Sea is expected to drop overall non-OPEC production to 57.7 mb/d. US light tight oil, the driver of US growth, is forecast to shrink by 0.4 mb/d next year," IEA said in its monthly report September 11.
Brent and WTI crude have fallen below $50/bl and the price collapse is closing down high-cost production from Eagle Ford in Texas to Russia and the North Sea, IEA said.
At the same time, crude output from OPEC suppliers fell by 220 thousand b/d in August to 31.57 mb/d, led by losses in Saudi Arabia, Iraq and Angola.
US oil production expanded by a record 1.7 mb/d in 2014 and "rigorous analysis of our data suggests that US light tight oil supply, the engine of US production growth, could sink by nearly 400 thousand b/d next year as oil's rout extends a slump in drilling and completion rates," IEA said.
The number of active US oil and gas rigs rose by 17 between July and August, to 883, but this was still far lower than the 1,904 rigs counted in August 2014, according to separate data from Baker Hughes.
In Canada, 206 oil and gas rigs were operational in August, up by 23 rigs compared with July but around half the number counted in August 2014.
Demand recovery to prompt OPEC increase in 2016: IEA
IEA also said that lower oil prices and a strengthening macroeconomic backdrop will lift global oil demand growth to an expected five-year high of 1.7 mb/d in 2015, before moderating to a still above-trend 1.4 mb/d in 2016.
"US motorists are taking to the roads, propelling domestic gasoline demand to an eight-year high. We expect China, the world's second largest oil consumer, to keep up its crude purchases," it noted.
An anticipated loss in non-OPEC output will put pressure on lower cost OPEC producers to turn up the taps in 2016, IEA said.
The IEA's forecast shows the 'call' on OPEC in the second half of 2016 leaping to an average 32 mb/d - a level last pumped seven years ago. The OPEC group produced 31.6 mb/d during August.
"On the face of it, the Saudi-led OPEC strategy to defend market share regardless of price appears to be having the intended effect of driving out costly, "inefficient" production," IEA said.
US to sell final 43 million acres of GoM leases from five year program
The US Bureau of Ocean Energy Management is to allocate over 43 million acres of oil and gas exploration leases offshore Louisiana, Mississippi and Alabama in a sale which will take place in March 2016, BOEM said September 9.
The two lease sales will cover all available unleased areas in the Central and Eastern Gulf Of Mexico Planning Areas, representing the ninth and tenth offshore sales in a five-year program which has already offered more than 60 million acres and raised $3 billion in US taxes.
Proposed CPA sale 241 will cover 42.5 million acres on sites situated between 3 and 230 nautical miles offshore, in water depths ranging from 9 feet to more than 11,000 feet (from 3 m to 3,400 m deep). This lease sale could provide production of between 460 to 894 million barrels of oil and 1.9 to 3.9 trillion cubic feet of natural gas.
Proposed EPA Sale 226 covers a smaller area of 595,475 acres, in an area 125 statute miles offshore in water depths ranging from 2,657 feet to 10,213 feet (810 to 3,113 meters). This area is south of eastern Alabama and western Florida and the nearest point of land is 125 miles north-west in Louisiana.
BOEM estimates lease Sale 226 could result in production of 71 million barrels of oil and 162 billion cubic feet of natural gas.
Statoil awards contracts on Johan Sverdrup after approval granted
In the three weeks since Norway’s Ministry of Petroleum and Energy has approved the development of the first phase of Johan Sverdrup oil and gas field in the North Sea, one of Norway’s largest developments ever, Statoil has signed several services contracts.
Johan Sverdrup reportedly holds up to 2.9 billion barrels of oil and on September 14 Statoil said it has awarded an engineering, procurement and construction (EPC) contract for the gooseneck spool and retrofit hot-tap tee to IKM Ocean Design. The oil firm followed up with news that it had awarded the EPC contract for subsea equipment to FMC Kongsberg SubseaAS on 18 September.
The IKM Ocean Design contract is part of the gas export solution from the Johan Sverdrup field and the assignment will take about two years to complete. Work starts immediately.
The gas from the field will be exported to Kårstø via a new 18-inch pipeline, tied into the Statpipe rich-gas leg from Statfjord with the aid of hot tapping and connection to a 30-inch retrofit tee. Installation will be diverless, using hot tapping equipment from the pipeline repair system base in Haugesund.
The contract with FMC Technologies has an estimated value of NOK 1.3 billion and includes deliveries of 13 subsea trees and well heads, three subsea templates and control systems. It also includes options for further deliveries to cover any future needs on the Johan Sverdrup field and other possible field developments in the Norwegian North Sea.
Johan Sverdrup is one of the five largest oil fields on the Norwegian continental shelf. Phase one of the sizable project consists of four bridge-linked platforms and three subsea templates. The project is expected to cost around $14.3 billion with first oil due to flow in 2019.
Statoil ASA has a 40.% participating interest in the field, Lundin Norway another 22.6%, while Petoro, Det Norske Oljeselskap and Maersk Oil Norway hold stakes of 17.36%, 11.6% and 8.44%, respectively.
Maersk Oil gets green light to develop UK Culzean field
A.P. Moeller-Maersk has received approval to develop the $4.5 billion Culzean gas field, the largest new find in the U.K. North Sea for a decade, the company said on 31 August. The field contains between 250 million and 300 million barrels of oil equivalent and is expected to start producing in 2019.
Maersk Oil, the oil and gas unit of the Danish shipping firm, said Culzean, discovered in 2008, benefits from a U.K. government support scheme for high-pressure, high-temperature fields, which typically are more expensive to develop than lower-pressure fields because of the technology that has to be deployed.
Maersk Oil is operator of the Culzean field with a 49.99% stake. JX Nippon owns 34.01% and BP subsidiary Britoil has a 16% stake.
Subsea 7 to project manage Culzean development
Norwegian seabed-to-surface offshore engineering firm Subsea 7 signed a $150 million contract with Maersk Oil for work on the Culzean development. Work will start immediately.
Subsea 7 will provide project management and engineering work for the subsea, umbilical, riser and flowline (SURF) contract with work due to be completed by 2017.
The contract scope includes procurement, construction and installation of a 22" diameter 52 km gas export pipeline connected to the Central Area Transmission System (CATS), and a 3.6 km pipe-in-pipe (10" outer pipe and 6" inner pipe) providing insulation for the transportation of the condensate to the in-field Floating, Storage and Offloading facility (FSO). The pipe-in-pipe will be laid with a 4" piggy-back line that will transport fuel gas to the FSO. Subsea 7 will also provide subsea structures, tie-ins to the Culzean platform facilities and pre-commissioning expertise.
The Culzean field is located in Block 22/25 of the Central North Sea at a water depth of approximately 90 metres.
Total sells North Sea pipeline and gas terminal for £585 million
French oil company Total has signed an agreement to sell all of its interests in the Frigg UK pipeline (FUKA), the Shetland Island Regional Gas Export System (SIRGE) gas pipelines and the St. Fergus Gas Terminal to North Sea Midstream Partners for £585 million ($908 million).
The Frigg UK Pipeline (FUKA) is a 362-kilometer, 32” gas pipeline that was originally constructed in 1977 to connect the Frigg Field on the UK - Norway median line to the St. Fergus Gas Terminal in Scotland. The Frigg Field is now decommissioned but the FUKA pipeline is still operational, delivering gas from some 20 fields in the Northern North Sea to the terminal at St Fergus. Total holds a 100% operated interest in the FUKA pipeline.
The St. Fergus Gas Terminal is a three-train processing plant with a capacity of 2,648 Mmscf/d, currently serving over 20 fields. Total holds a 100% operated interest in the terminal.
Faroe finds oil at Boomerang well but gives up on Portrush
Norwegian firm Faroe Petroleum said it found reserves of between 13 and 31 million barrels of oil equivalent at the main bore of its North Sea Boomerang exploration well.
Earlier in September the company had plugged and abandoned its Portrush well in the Norwegian North Sea after it failed to find any oil or gas. The rig used on the Boomerang well will be moved approximately 6 kilometres north east to drill the Blink prospect, the company said on 17 September.
The Portush well is operated by Royal Dutch Shell and 20% owned by Faroe.